WATCH PRICES: “Retailers need to turn into gallery owners”

“Retailers
need to turn
into gallery
owners” François-Xavier Mousin and
Caroline Buechler
(who worked for swiss retailer
Les Ambassadeurs and now head up
Opus Magnum consultants)
set out this “revolutionary” concept.

WATCH PRICES: “Retailers need to turn into gallery owners”

“Retailers
need to turn
into gallery
owners” François-Xavier Mousin and
Caroline Buechler
(who worked for swiss retailer
Les Ambassadeurs and now head up
Opus Magnum consultants)
set out this “revolutionary” concept.

“T

he e-commerce takeover is final proof that the
old retail model needs to be rethought. It is high
time to reinvent it by separating the experiential
and commercial functions, and the margins that
go with them.
The traditional role of retailers was to
offer a complete “package” combining
the sensorial experience and the sale.
Their remuneration was thus based on
these two missions and took into account
both the costs of representation
and the sales costs. A boutique was both
a showcase and a sales venue.
The arrival of e-commerce has severed
these two functions irrevocably. It is
now possible to sell without offering
the sensorial experience, and to offer
the whole product experience without
selling, because customers can take advantage
of the physical infrastructure
of a traditional retailer and then finalise
their purchase on the internet.

Image by Fabian Oefner - disintegrating Audi Auto Union TypeC

This behaviour is going to escalate and become generalised.
It is perfectly normal and legitimate for a customer to seek
the best price for the best service.
As high as it may appear to the uninitiated, a profit margin
of 50% for a retailer on the sale price of a product – which
is an exception in the watchmaking world, it must be said
– has to cover far more than just the cost of the sale: an exorbitant
boutique on one of the best streets in town, impressive
display windows, sofas in the best leather, top-level sales
staff, champagne and bouquets of flowers. You can’t show
a luxury watch in a papier mâché shop in the middle of an
industrial estate. The luxury experience has to be complete,
otherwise it isn’t luxury.
What is abnormal is that the same margin should be granted
indiscriminately, as it is today, to retailers who invest millions
every year in their boutiques and to obscure players
whose principal source of income is a virtual shopfront on
Amazon, Yahoo or Chrono24.

Dividing the trade
into two functions

The model we’re putting forward is extremely
simple: it consists of dividing
a trade into two functions: sales on the
one hand and experiential promotion
on the other.
Dematerialised sales require no major
physical structure while offering the
same service as far as delivery times, guarantees,
after-sales service and convenience
are concerned, whether physical
or virtual. Consequently, they should be
remunerated on the basis of lowest cost
for greatest efficiency, that is, a margin
of 10-25% of the sale price, whatever the
channel used.
As for the “representational” function,
it has to be dissociated from the sales
margin and only be attributed to players
who actually practise it, according to new parameters
which have nothing to do with realised turnover, such as
visitor volume, surface area and display quality, showcase
area, training of sales staff, type of associated services and
so on.
Redistributing roles in this way is the only way to keep the
dependent businesses alive so they can sell physical sensorial
experiences. It is also the only way of getting out of the
damaging logic of the grey market and discounts, since the
trade margin offered will no longer allow prices to vary so
wildly depending on operating costs.
Lastly, it will give rise to genuine “experience professionals”
instead of sales, since remuneration will only be very partially
indexed to pure sales performance. It will also be more effective
than all those product training campaigns that all businesses
insist on holding at great cost and with no success.”